Lebanon’s 2026 budget approved: no salary adjustments

Lebanon’s Cabinet has approved the 2026 state budget without increasing public sector salaries. While no new taxes were officially imposed, a 3% additional levy on imports has raised alarms among economic actors, who warn of inflationary pressures and higher costs for everyday goods.

On Monday, Lebanon’s Cabinet approved the draft general budget for 2026, confirming what many had anticipated: no adjustments will be made to public sector salaries. Official documents emphasize that the budget does not rely on raising tax rates or introducing new taxes. Instead, the plan focuses on improving tax compliance and accurately estimating revenues.

However, the budget includes a contentious measure in Article 31: a 3% additional tax on all imports. This provision has immediately sparked protests from economic associations, who warned that the levy would directly impact the prices of goods on the market. For many business owners, this is a significant concern, particularly given the fragile economic situation in Lebanon.

Economic experts have weighed in on the potential consequences. They explained that increasing indirect taxes could trigger inflation, directly affecting Lebanese living standards.

This will inevitably drive-up prices, potentially by as much as 22%, creating inflationary pressures that will hit both the market and the broader economic cycle.

Indeed, Lebanon’s economy has been struggling under the weight of prolonged financial crises, currency depreciation, and reduced purchasing power. Any measure that increases the cost of imported goods risks further straining household budgets. Consumer prices for essential items from food to household goods could surge, amplifying the challenges already faced by ordinary Lebanese citizens.

While the government maintains that the new budget prioritizes fiscal responsibility and revenue collection, the opposition from business associations highlights a broader tension between policy intentions and market realities. Importers argue that enforcing the 3% tax could discourage proper declarations in the long term, as many already face logistical and bureaucratic hurdles. Moreover, the ripple effects on prices are expected to affect both consumers and retailers alike.

The Cabinet’s decision reflects a careful balancing act. On one hand, it seeks to stabilize public finances without adding new tax burdens. On the other, even modest measures such as the 3% import tax illustrate the fine line policymakers must walk in an economy highly dependent on imports and external trade. As Lebanon navigates these fiscal challenges, monitoring the real-world effects of such policies will be critical to prevent inflation from escalating further.

In summary, Lebanon’s 2026 budget represents a cautious approach to financial governance. While it avoids salary increases and new general taxes, the targeted 3% import levy may become a flashpoint for inflation and public discontent. For citizens and businesses alike, the coming months will reveal whether this compromise can achieve the government’s fiscal goals without exacerbating the cost-of-living crisis.